Yahoo! Search Marketing Update Imminent

I received an email from Yahoo! Search Marketing (Overture) last Wednesday informing me of the changes to take place on its Paid Search product.

It said that beginning the 5th of February (next Monday) in the US, changes on its pay-per-click advertising will commence:

Bid amount and ad quality will determine the placement of ads.

Contrary to the past that only the highest bidder gets the best position of their PPC ads, Yahoo! now will also look at the quality of its ads. If the ads are more relevant to whether they are relevant to search queries more than the others, these ads get preferential treatment by Yahoo! Search Marketing. Therefore, for every target keyword, an appropriate ad must be placed in order to secure a notable place on search results. Of course, money still is a big factor in the placement of ads.

This move, dubbed Project Panama by many of those involved in the industry, aims to promote better advertising through the introduction of Ad Quality. While it could mean less revenues to Yahoo!, client retention is expected to get better, advertisers who provide more relevant ads are rewarded with more targeted visitor traffic which may boost ROI numbers.

By looking at the ad’s historical performance and expected performance, Ad Quality can be determined. With historical performance, it is easier to predict the yield of an ad. Expected performance can be computed through comparing the ad with other competitors as well as using the existing Yahoo! algorithms.

With this development, it is required that existing ads should be reviewed. It is possible that charges could skyrocket if the terms and rates are left unchecked.